Refer to the Accompanying Figure to Answer the Following Questions

question 95

Multiple Choice

Refer to the accompanying figure to answer the following questions.

-If there is a $60 price ceiling imposed on a textbook,what will be the disequilibrium amount?

• A) There will be a shortage of 800,000 textbooks.
• B) There will be a surplus of 800,000 textbooks.
• C) There will be neither a shortage nor a surplus.
• D) There will be a shortage of 2,600,000 textbooks.
• E) There will be a shortage of 400,000 textbooks.

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Definitions:

FICA Taxes

Taxes collected under the Federal Insurance Contributions Act that fund Social Security and Medicare programs.

Regressive

Pertaining to a tax system in which the tax rate decreases as the taxable amount increases, commonly considered less fair because it imposes a heavier burden relative to income on those with less.

Progressive

Pertaining to a taxation system in which the tax rate increases as the taxable amount increases, imposing a higher percentage rate on the wealthy to ensure equity.

Consumption Tax

A tax on the purchase of goods or services, levied at the point of sale, designed to tax spending rather than income or savings.